Federal tax code may favor driving over other transportation modes
There are common complaints that transit is subsidized and roads pay for themselves; however, this is found over and over again to be untrue. Taxes are due in less than a month, and the Tri-state took a peak at the available and recently-expired tax credits and deductions that are related to automobile and transit use in the federal tax code. They did so in order to see if the tax breaks being proposed had a bias towards automobile use over other transportation.
It is possible that the federal tax code provides benefits for automobile owners; however, it seems as they offer limited incentives to taxpayers that take transit or travel by bike. This article isn’t meant to be an expert analysis on taxes, as we aren’t tax advisers, but it may be an optional guide or simply seen as an educated opinion.
If you own or operate a vehicle, these are some of the benefits you may earn:
Tax payers who choose to donate their vehicles to charity can receive a tax deduction
Individuals who have experienced an automobile crash that aren’t fully reimbursed by the insurance of the other driver, as long as the crash wasn’t the individual’s fault, may be able to deduct the unreimbursed amount.
Automobile owners may also receive tax credits to purchase or lease fuel efficient vehicles or even fuel cell vehicles and hybrid vehicles. Additionally, individuals may take a tax credit for qualified fuel cell vehicles that were serviced in 2012.
Also, individuals that drive to work may be eligible to take up to $245/month in a pre-tax deduction in order to cover parking expenses.
Categories: Federal Tax, Income Tax, Tax Law Tags: federal income tax, federal tax, gasoline tax, income tax, sales tax, taxes
Tax Season Tips: Avoiding Audits And ID Theft
For any number of reasons, tax season is stressful. Sure, everyone loves getting their return (if you don’t believe that, check the sales of Big Screen TVs and other luxuries in late April) but at what price? Outside of the sometimes exorbitant fees charged by tax preparers, modern citizens also have to contend with the “paper file versus efile taxes” debate and be concerned with identity theft.
What do you mean identity theft?
Oh, you hadn’t heard? Tax season is like Christmas for frauds and thieves. Late filers often find their returns rejected because an identity thief has already submitted a big, fat phony return using their name. And while IRS resolution centers work very hard to try to catch fraudulent tax returns and identity thieves, there are simply too many out there. That’s why each year, 50 year old grandmothers and 19 year old food service employees alike are at risk. Each year, the IRS releases a “Dirty Dozen” list to help you stay alert.
There is an enormous list of ways to fall victim, several of which are detailed in brief below:
Identity Theft: We’ve spoken about this already. Someone uses your personal information, such a Social Security number, to commit fraud. Commonly, they will file tax returns to claim refunds, typically under $5,000. Then your return gets rejected, and you’ve got months of headaches while it all gets sorted out.
Phishing: Computer criminals commit identity theft or financial theft after gaining personal information through the use of false e-mails or websites. A good thing to keep in mind to avoid being “phished” is to remember that the IRS never contacts taxpayers through any type of electronic communication.
Return Fraud. According to the IRS, 60% or so of taxpayers will go to professionals – H&R Block, Jackson Hewitt, or other tax preparers – to get tax help. The vast majority of them will get exactly what they’ve gone for: honest help. An unlucky few will fall victim to unscrupulous tax preparers. It is important to never sign a blank return, and to choose carefully when deciding on a tax professional. Even if you’ve gotten someone else to do your taxes for you, you and you alone are liable for the information put down on the return.
Falsifying Returns. Sometimes it is tempting to commit a low level sort of fraud yourself. Claiming exorbitant expenses to which you are not entitled, or taking advantage of the Fuel Tax Credit, for instance. In these cases, you yourself are the criminal, and the IRS can and will prosecute. Don’t allow false information on your returns.
How You Can Protect Yourself:
Contact the IRS if your wallet is stolen, if your information may be stolen, or if you have questionable credit activity.
Never, ever sign a blank return.
Don’t file your taxes over public Wi-Fi hotspots.
Use a reputable tax preparer or a reputable software
Don’t leave important documents lying out, or in your vehicle, or anywhere thieves can get to them easily.
It’s important to keep these things in mind whether you’re planning to efile taxes or paper file.
Featured images:
License: Creative Commons image source
Tony has been a tax professional for several years and likes to share some tips when it comes to protecting yourself.
Categories: Federal Tax, Income Tax, State Tax, Tax Law Tags: audit, identity protection, identity theft, tax advice, taxes
Tax Avoidance – Time To Name And Shame?
Much has been made over recent months about aggressive tax avoidance schemes and the types of companies and individuals who enter into them. As the media has seemingly started to try to ‘name and shame’ those promoting the scheme, as well as some of their higher profile participators (such as Jimmy Carr), is the next step to publicise other individuals and companies who become involved in such strategies? There seems to be a suggestion that those entering into tax avoidance schemes are somehow immoral. But is this a fair assumption to make? Consider the generation of people who have never worked and have milked the welfare system for every penny. Is it fair to name and shame those who have made their money, contributed to the country’s coffers and who want to keep some money back for themselves?
It is widely reported that HM Revenue and Customs (HMRC) loses out on £5billion of revenue a year as a result of tax avoidance schemes and the exploitation of loopholes. Despite efforts to try to stem the flow of such schemes, with specialist anti-avoidance teams in place across the UK, there is no doubt the ’boutique’ firms are still peddling their wares.
The House of Commons Public Accounts Committee has recently reported that HMRC is failing when dealing with the ’boutique’ tax practices in more ways than one. Inefficiency within HMRC when dealing with such matters means that it can take a long time before a scheme can be closed. As such, scheme promoters will use this as leverage when selling schemes to their clients. For the taxpayer, they are sold a scheme on the basis that if it works then they will not pay tax at all. If it fails, then they have delayed paying the tax.
For companies and individuals, this is extremely tempting when it comes to making the choice between making payment to HMRC as required or retaining the funds (even if temporarily) for themselves. Cash flow has become prevalent as the economy continues to struggle.
The committee advised that there needs to be more of a deterrent, for the firms selling the schemes and those entering into them. One suggestion is that the scheme providers and participators should be publicised on a list or ‘named and shamed’. However, there is a strong argument that this is contrary to the rights of the individuals involved.
As well as this, it would be difficult to judge which schemes should be listed. There is a big grey area between normal, run of the mill tax mitigation planning and the aggressive tax schemes which are under fire. Mistakes could be made which could ruin the reputation of those perceived to be involved in ‘aggressive’ tax planning as part of a name and shame campaign. This grey area, whereby people seek to plan for their taxes within the realms and intention of tax legislation, would need to be protected.
Mandy Jones is a highly experienced specialist when it comes to tax planning and so is well placed to offer advice for the likes of taxrebate.co.uk.
Categories: Federal Tax, Income Tax, State Tax, Tax Evasion, Tax Law Tags: finance, money, tax, tax rebate, taxes